As part of a settlement, both Mastercard and Visa will lower interchange rates for US consumer and commercial credit transactions.
Mastercard has announced an agreement aimed at reducing its US credit card interchange rates for retailers for a period of at least five years.
This agreement comes as part of a legal settlement with merchants, providing them with clarity and certainty regarding payment card acceptance.
As per the settlement terms, Mastercard, along with Visa and the court-appointed class counsel, will implement a reduction in the published and effective interchange rate on US-issued consumer credit and commercial credit transactions at merchant locations across the US,
This reduction will effectively serve as a cap for a five-year period, providing merchants with visibility and certainty in their acceptance programmes.
The agreement covers all US-issued credit programmes, including new products under the Mastercard brand, fostering continued competition within the industry.
Simplified surcharging and discounting rules
Additionally, the settlement includes adjustments to simplify surcharging and discounting rules for credit card transactions.
This move aims to provide merchants with more flexibility and optionality in managing their card acceptance processes while maintaining core consumer protections and transparency.
The simplified approach replaces previous standards, offering retailers a clearer framework for their transactions.
The settlement is currently awaiting final approval by the Eastern District court of New York.
Upon approval, Mastercard will have addressed the majority of pending US merchant litigations concerning interchange structure and merchant acceptance rules.
It is important to note that Mastercard’s agreement to the settlement does not imply an admission of any improper conduct with respect to the plaintiffs’ allegations.
All changes to rules and practices will occur post-settlement approval, anticipated to take effect in late 2024 or early 2025.
This agreement follows a prior settlement with a damages class, with detailed information available in Mastercard’s Annual Report on Form 10-K for the year ending 31 December 2023.
Source from Retail Insight Network
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